NAFTA on crack

By Gabriel Roth, in the San Francisco Bay Guardian
15 October 1997

If you thought NAFTA was bad, wait till you meet MAI.

BAY AREA environmental, labor, and community activists are at the
forefront of the struggle to block a new corporate-backed
international treaty that would take some of the most dangerous
provisions of the North American Free Trade Agreement and apply them
worldwide.

There's been virtually no media coverage of the proposed
Multilateral Agreement on Investments (MAI) in the United States.
But it would transform the way much of the world does business.
Among other things, MAI would

virtually eliminate restrictions on international investments;

prevent governments from instituting policies aimed at
strengthening local economies;

allow multinational corporations to sue governments for impeding
those corporations' "right" to make a profit at the expense of
communities and the environment; and

The Clinton administration is leading secret negotiations on the
agreement within the Organization for Economic Cooperation and
Development (OECD), which includes 29 of the world's richest
countries. Negotiations, which began in May 1995, take place in
Paris every six weeks.

The treaty would prevent governments from distinguishing in any way
between investors from different countries, and would sharply limit
"performance requirements" -- government demands that corporations
meet certain conditions, such as labor protections and environmental
regulations, to do business or qualify for government tax breaks,
targeted loans, or other such preferences.

Under MAI, local, regional, and federal governments could no longer
make low-interest loans to local businesses, cut taxes for
businesses that hire members of local communities, or give
minority-owned or environmentally conscious companies preference in
the awarding of public-works contracts. In short, any government
intervention to strengthen the local economy would be forbidden.

"The idea behind MAI is that local is a dirty word, and that
countries should not be allowed to ... forge an economic development
strategy that is peculiar to the needs of the local population,"
Scott Nova, of the Washington, D.C.-based Preamble Center for Public
Policy, told the Bay Guardian.

Advocates of MAI say the treaty will stimulate economic growth.
Steven Canner, vice president of the United States Council for
International Business, which advises the OECD, told the Bay
Guardian that MAI will "help to grow the international economic pie
[and] create greater efficiency in the flow of international
capital."

But critics charge that the agreement's benefits will flow almost
exclusively into the pockets of multinational corporations.
"It's not small businesses that are going to be making international
investments," Nova said. And he fears the treaty would create "a
competition between countries to attract capital that increasingly
becomes based on a country's capacity to keep wages low and
regulations lax."

When asked how MAI's drafters hope to prevent such an outcome, Wes
Scholz, who as director of the U.S. State Department's Office of
Investment Affairs is among those negotiating the agreement, cited
proposals on the table to include in the treaty references to labor
rights and the environment. But none of the proposals he cited would
be in any way binding; they would merely encourage countries and
investors to behave responsibly with regard to public safety, labor,
and the environment.

"The State Department has said to us, 'We can't possibly get binding
language on the environment and labor; no other countries would go
for that,' " Chantall Taylor of the Washington, D.C.-based Public
Citizen's Global Trade Watch told the Bay Guardian. "Then we find
out from our coalition partners abroad that their countries are
willing to go with binding language and it's the U.S. that is
opposed."

Indeed, William Witherell, the OECD's director of financial, fiscal,
and enterprise affairs, has suggested that "competitive
deregulation" of the kind Nova describes might be part of OECD's
goals. In a Nov. 12, 1996, speech he warned, "Borders will not
protect national economies nor their markets.... Should governments
fail to reform obsolete regulations ... they will likely become
second-rank actors, even in their own markets."

The MAI negotiations were kept under wraps until a draft of the
treaty was leaked to French activists in November 1996. When those
activists placed the text on the Internet, environmentalists, labor
advocates, and citizens-rights groups around the world began calling
for greater openness on the part of negotiators and more public
discussion of the proposed agreement.

Such openness is particularly important, some critics argue, in
light of the treaty's potential to undermine national sovereignty.
MAI would "subvert our ability as a so-called free people to be
self-governing," Henry Holmes of the San Francisco-based Sustainable
Alternatives to the Global Economy told the Bay Guardian.
"We've already had challenges [under existing treaties] by foreign
multinationals that have prompted the U.S. Congress and President
Clinton to change and weaken laws that people here in this country
have determined are in the public interest," Holmes said (see "Hall
of Injustice," 5/14/97).

MAI would allow corporations and private investors to sue
governments for what they perceive as unfair restrictions on
investments. Other than a single, narrow provision of NAFTA, this
would be the first time in international law that corporations would
have the right to file suit. Disputes would be resolved in
international tribunals, and decisions made in such cases could not
be appealed.

While MAI would impose an unprecedented set of restrictions on
governments, it would impose no restrictions whatsoever on
investors. "It's going in the direction of empowering and freeing
corporations while limiting the scope of government's regulatory
ability and reducing the bargaining power of workers," Thea Lee,
assistant director of public policy at the AFL-CIO, told the Bay
Guardian.

Thanks to pressure from activists around the world, the OECD has
agreed to meet with nongovernmental organizations in late October.
Activists hope the meeting will prompt negotiators to incorporate
binding labor and environmental protections in the treaty, but few
hold out much faith. "They set an agenda that lets them talk for six
hours and us for one," Taylor said. "Who knows how much our input
can have an effect considering [the treaty is] nearly 90 percent
complete."

The business lobby has steadfastly opposed any restrictions on
investors. "This is a negotiation about international investment,
about opening markets and removing restrictions to the flow of
international capital," said the USCIB's Canner. "It's not
appropriate to negotiate on matters that are not germane to the
heart of the agreement."

The OECD hopes negotiations will be over in time for a finished
treaty to be presented to member nations at the organization's May
1998 meeting. After ratification, OECD representatives would present
the treaty to their governments for approval. Activists in OECD
member countries are working to inform the public about the treaty's
possible consequences, hoping that pressure from citizens will force
lawmakers to take public concerns into account. "The American public
doesn't like these agreements and doesn't believe they are written
with the interests of everyday citizens in mind," Nova said. "The
more public debate there was [on NAFTA and GATT], the less popular
the agreements became."

Victor Menotti, program director at the San Francisco-based
International Forum on Globalization, is hopeful that this strategy
will stop MAI's progress. "It's going to be citizen pressure from
all over the world that does it," he told the Bay Guardian.